> For the complete documentation index, see [llms.txt](https://guide.laevitas.ch/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://guide.laevitas.ch/option-strategies/bear-diagonal-spread.md).

# Bear Diagonal Spread

## Bear Put Diagonal Spread

{% hint style="info" %}
A Bull Put Diagonal Spread is done with a purchase of a longer dated out-of-the-money Put option and sale of a shorter dated out-of-the-money Put option, both which have different strike prices.
{% endhint %}

### **Payoff Diagram:**

![](/files/2nKB30Lq4FuyzyYvHfSI)

**Direction Assumption:** Neutral-Bearish

**Maximum Profit at Near-Dated Expiration:** Credit received from selling Put + Profit of Long Put\
Maximum profit at the near-dated expiration is realized when the underlying is at the Short Put strike price.\
\
**Maximum Profit at Far-Dated Expiration:** Unlimited<br>

**Maximum Loss at Near-Dated Expiration::** Unlimited\
\
**Maximum Loss at Far-Dated Expiration:** Limited to the debit paid for the Long Put.\
Maximum loss at the far-dated expiration is realized if the underlying moves below the Long Put strike price.

**Breakeven Price at Far-Dated Expiration:** Equal to the Long Put Strike Price + Premium paid

**Theta:** Passage of Time -> Positive Effect\
The net effect of time decay is positive. It will erode the value of the Short Put in a bigger extent than the Long Put.

**Volatility:** Positive Effect